TMI Blog2019 (1) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... more ledger i.e “Purchase-godown” ledger was maintained which carried details of sales made by the Appellant. The Appellant has shown from sample entries that the purchases shown in said “Purchase – godown” ledger were of M/s SFPL and is almost same to the sales shown in “Bombay Sales” ledger. It is their contention that the “Purchase-godown” legder shows the receipt of goods from M/s SFL by SFPL and the “Bombay Sales” ledger the sales of said goods by M/s SFPL which makes clear that the “Bombay sales ledger belong to M/s SFPL and not SFL. We find that it has not been disputed that the godown at Vasai was owned by M/s SFPL, hence in such case if any godown purchase is shown the same can be only of M/s SFPL. The officers alongwith such ledgers also found the godown records of M/s SFPL and those bundles numbered as 8 to 11 were in handwriting of Dheeraj Jain, godown keeper of M/s SFPL alongwith duplicate copies of chits founds were on account of dispatch of goods thru borkers. The Appellant has shown the total of value mentioned in “purchase godown” ledger and compared with “Bombay Sales” which shows that the figures of both are of around same value - Some of the brokers viz. Shri Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances, the demand on account of clandestine removal cannot be made. The onus to prove clandestine clearances has to be discharged by sufficient cogent, unimpeachable evidence - the charges of clandestine removal on the basis of pen drive data and sheets are not sustainable. Demand on the ground of undervaluation - Held that:- The revenue has relied upon the statement dt. 28.01.2014 of Shri Kartik Shah wherein he stated that the conclusion drawn by the investigating officers seems to be correct. However no evidence has been placed on record. Even the statement dt. 28.01.2014 gets negated by the subsequent statement dt. 08.10.2013 wherein he stated that he is not able to offer explanation as the pen drives do not belong to Appellant and they have never received any differential value over and above the value shown in invoice. This statement was not mentioned in show cause notice and the appellants have annexed copy of the same with the appeal papers. In such case only on the basis of pen drive the charges of undervaluation cannot be sustained - demand on account of undervaluation is not sustainable. CENVAT Credit - fake invoices - it is alleged that M/s SFL has avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st Appellant M/s Shah Foils was confirmed alongwith interest and penalty. Also penalties were imposed against other Appellants namely Shri Ramesh Manilal Shah and Kartik Ramesh Shah. In case of Order-in-appeal dt. 07.11.2017 a penalty of ₹ 4,62,986/-, in case of Order-in-appeal both dt. 29.09.2017 a penalty of ₹ 10,000/- and ₹ 1,00,000/- has been imposed upon M/s SFL in terms of Rule 26 (2) of the Central Excise Rules, 2002. The facts of the case are that the main Appellant M/s Shah Foils are engaged in manufacture of Stainless Steel Cold Rolled (SSCR) Coils falling under chapter 72 of the Central Excise Tariff Act, 1985. Based upon investigation they were issued show cause notice dt. 06.05.2014 alleging clandestine removal of goods. The demands were raised on the ground that investigation and searches were conducted at the factory and office premises of the Appellant concern and one trading firm M/s Sankalp Foils Pvt. Ltd (SFLP). Search proceedings was also conducted at premises of Lottery/ Icecream stall of one Shri Manoj Tanna situated opposite the office premises building of M/s Sankalp Foils Pvt. Ltd. (SFPL), a firm engaged in trading goods of M/s SFL at Mumb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty to buyers other than Bombay Sales as detailed in ledger Smi (Cash) . (iii) a demand of ₹ 6,35,42,173/- was made on the ground that they have suppressed production of finished goods as detailed in ledger Smi (Cash) and cleared the same without payment of duty. (iv) A demand of ₹ 1,07,76,233/- was made on the ground that M/s SFL has undervalued their goods at the time of clearance as found from the ledger account Direct Purchase (Value Diff.) and Direct Sales (Value Diff.) . (v) A demand of ₹ 31,40,087/- was made on the ground that M/s SFL has availed credit on the basis of invoice without actual receipt of goods. 2. It was also proposed to impose penalty on M/s SFL and other appellants. The adjudicating authority vide impugned order dt. 27.02.2018 confirmed the demand as proposed in the show cause notices and also imposed penalties against the Appellants. Resultantly Appeal No. E/12274/2018 by M/s SFL, Appeal No. E/11436/2018 by Shri Ramesh M Shah and Appeal No. E/114433/2018 have been filed. 3. Based on aforesaid investigation a Show Cause Notice dt. 30.04.2015 alleging that M/s Clayris Ceramics Pvt. Ltd., Morbi has availed credit on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the ledger category direct sale which refers to sale on invoices. Thus such a cash sale is treated as clandestine sale without any invoice. The ledgers obtained from 3 Pen drives and 11 bundles of paper at Venilal Safety Vaults reflect the transactions of SFL and of M/s SFPL as it was admitted by Shri Ramesh Shah in statement dt. 10.07.2012 that the data contained in the pen drive, the hand written papers and hard copy of ledgers belong to SFL showing the sale and purchase transactions party wise. SFLP is a different and independent trading unit and has a godown at Vasai. Therefore it is not logically correct that both the units have a common ledger. Even Shri Ramesh Shah could not explain as to how the data of SFPL got integrated in the SFL ledger. As per simple accountancy principles, any single account reflecting opening balance, incoming, outgoing and closing balance can never reflect the transactions of two different firms at a time. Since some part of the details reflected are recorded transactions of SFL, the cash transactions referred to in Bombay Sales are also to be of SFL. Shri Ramesh Shah on one side has stated that due to his wife illness, he was unable to lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are shown as cash in the ledger and which appears to be receipt of huge cash amounts by SFL relating to their cash sale of goods. Similarly some transactions show the name of the party in which the entries of cash receipts also indicate quantity of the goods sold in kgs and rate per kg. Scrutiny of ledger account Smi (Cash) reveals cash purchases of inputs by SFL from various parties. The Particulars shown under entries like cash or sale against certain names do not match with the recorded sales. The receipt of regular huge amount of cash can only be on two accounts i.e. Sale proceeds of goods by SFL or receipt of cash loans from parties whose names are mentioned in the Smi (Cash) ledger account. The said ledger account nowhere reflects return of the amounts to said parties, the receipt of said cash amounts can only be against cash sale of goods. The sale shown in Smi (Cash) does not match with the recorded cash sales. Shri Kartik Shah admitted the fact of cash sale of goods and issuance of only sale invoice to the parties without sale of goods in his statement dt. 28.01.2014. His contention that SFPL was responsible for cash sales of the goods after clearance from SFL on p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y M/s SFPL, the claim does not appear to be correct since the involvement of SFPL does not come on record and no evidence was supplied by SFL that the invoice accompanied the goods when they themselves stated in the ledger entry as only bills . 7. In case of impugned Order-in-Appeals, the Appellate authorities has upheld the penalties imposed upon M/s SFL under rule 26 (2) holding that the invoices were issued without actual delivery of goods by relying upon the same investigation. 8. Being aggrieved by the impugned orders the Appellants have filed the instant appeals. 9. Shri Anand Nainawati, Ld. Counsel appearing for the Appellants submits that in case of impugned order dt. 27.02.2018, the allegation have been made on the basis of statements of persons where all of them were shown the seized ledgers and data and all have accepted the clandestine clearance and other allegations. He submits that during the search at Appellant s premises no incriminatory document or evidence was found. They are selling goods through their dealer M/s Sankalp Foils Pvt. Ltd. (SFPL) or sales to buyers through brokers and direct sales. In case of sale made to buyers in and around Mumbai, the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the adjudicating authority. Therefore the reliance placed upon by the Commissioner on the statements of various persons to deny cross examination is wrong. That they had also prayed for following the procedure under Section 9D of the Central Excise Act, but the same was also not followed. He submits that in absence of following the procedure under Section 9D and refusal of cross examination, the statements relied upon by the adjudicating authority has no evidentiary value. The Commissioner has relied upon only those portions of the statements which are in favour of the department and either ignored or summarily rejected the portions of the statements supporting the contention of the Appellants. The cross examination was sought as there was contradictions in the statements. Further many of the statements were recorded after the last statement of Shri Ramesh, Director of M/s SFL. Therefore there is no question of presenting all the statements at the time of recording of statement of director. The directors have categorically denied any clearance of finished goods by the Appellants without payment of duty and have stated that the diversion of goods, if any has taken place at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in cash from the customer and handed over to Shri Ramesh Shah. But on the other hand he has stated that he does not know the names and address of the parties who have purchased the goods through him as a broker in cash and from whom he stated to have collected payment. Statement of Shri Gajendra Purohit, broker was recorded on 13.09.2012 wherein he stated that the ledger Bombay Sales contains the goods purchased by him from M/s SFL and the payments were made by him in cash. Even though he stated that the goods were used by him for cutting circle and were also sold to parties in cash, yet he stated that he does not know the name and address of any person to whom the goods were allegedly sold. Similarly in case of alleged issue of invoice without delivery of goods, the statement of Shri Pravin Vasant Mehta of M/s Jigar Plast was recorded on 13.12.2013 wherein he has stated that sale invoices of the Appellant without delivery of goods has been reversed. However Shri Pravin Mehta has nowhere stated that they have purchased goods from M/s SFL and all the goods were procured by M/s Jigar Plast through broker Shri Atul Parekh. Shri Pravin Mehta also stated that Shri Atul Parekh has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicating authority has wrongly proceeded with assumption that the data and documents seized from the lockers belong to the Appellant alone and reflects only the Appellants transactions. The impugned ledger pertains to the transaction of M/s SFPL. The adjudicating authority reached to such conclusion on the ground that the details contained in hand written sheets in Gujarati were compared with the details in pen drive and the date of transaction, name of party, quantity of goods, invoice no, of the Appellant, cheque no etc were matching and the same was admitted by Shri Rakesh Shah. He submits that such matching is of no consequence as both of them were seized from third party premises and were not maintained by the Appellants. Further Shri Rakesh Shah in his statement dt. 10.07.2012 has stated that the documents are of both i.e M/s SFL and M/s SFPL and was further clarified in his statement dt. 25.07.2013 wherein he stated that the ledger Bombay sales belongs to M/s SFPL and he was maintaining the same on behalf of Ms SFPL. 10. The demand of ₹ 13,22,68,484/- has been made on the ground that the Bombay Sales ledger in seized pen drive belong to the sales made by M/s SF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.40,77,80,267/- Rs.41,40,71,084/- Total 126,21,51,801/- Rs.131,26,01,216/- 11. He submits that if the contention of the revenue is accepted and Bombay sales ledger is treated as ledger account of M/s SFL for sale of goods in cash then the existence of Purchase-godown ledger indicating purchase of a similar quantity of goods and containing invoice number of invoices issued by the Appellants cannot be explained. Therefore it leads to conclusion that the demand of duty on Bombay sales is not sustainable. He also highlights entries which shows the receipt of goods from the Appellant issued under invoice in Purchase-godown during the impugned period corresponding with the subsequent entries in Bombay Sales ledger accounting during the said period and submits that the demand of duty on Bombay sales would lead to demand of duty twice on same goods. He also takes us through the list of invoices alongwith corresponding lorry receipts and Form No. 402 issued by the VAT department Gujarat showing transaction to Maharashtra. He submits that even though details of purchase godown registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g after the records of M/s SFPL. The records does not pertain to any clandestine clearance. Merely because the records were stored in locker owned by Shri Ramesh, it cannot imply that the same pertain to clandestine clearance when the said records also contained ledger accounts like Direct Sales which admittedly is a ledger account of Appellants for sales made directly to the buyers and where payment of duty has not been challenged. The office premises held to be of M/s SFL is wrong as it is registered premises of M/s SFPL and no document pertaining to Appellants was found. Both M/s SFL and SFPL are separate legal entities. The contention of the adjudicating authority that there is no investment of Snehil R Shah in trial balance which shows account of Bombay Sales which means that trial balance belongs only to Appellant, is wrong as it is not mandatory that for a director to invest in the company in which he is a director. It is not mandatory for director to have investment. The absence of same does not render the trial balance as of M/s SFL. If the contention of Ld. Adjudicating authority that there was no connection between the invoice and its quantity destined for cash sale as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count Smi (Cash) contain details of cash receipts/ transactions. During entire investigation not a single rupee of cash was found to have been received by the Appellant. If such huge cash of ₹ 75 Cr, approx would have received by the Appellant, the revenue should have proved the same with sufficient corroborative evidence. The allegation is in the nature of assumption as the show cause notice in Para 11.3 has alleged that calculation shows that the Appellant has effected cash sales. Only for the reason that the Smi (Cash) ledger account do not match or tally with the recorded transactions of the Appellant cannot be a reason to assume that the Smi (Cash) ledger accounts reflects the transactions of the Appellants and that too clandestine. Shri Kartik Shah in his statement has clearly stated that M/s SFPL has diverted the goods and the goods were cleared by them on payment of duty. Though the details of sales were made by Shri Ramesh Shah but the same was maintained on behalf of Shri Snehil Shah, director of M/s SFPL. The Ld. Commissioner has contended that the ledger cannot be of two firms jointly and is of single firm. He submits that it is not a case of maintaining sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions of M/s SFPL. Secondly the statement shown to Shri Ketan Jain, son of proprietor of M/s Goa Metals was recorded after showing him the Goa Metal Crs account and not the Smi (Cash) legder account. In any case without grant of cross examination, the statement cannot be relied upon. He also submits that the reliance placed on the statement dt. 28.01.2014 of Shri Kartik Shah is erroneous as it is evident from the relevant paragraph of the statement that the Appellants have purchased some of their raw material through M/s SFPL under the cover of proper invoices. However from a perusal of the ledger account Smi (Cash) it appears that cash purchases have been made by M/s SFPL from some parties and only invoices are procured by M/s SFPL from other parties and the cash purchased goods alongwith the invoice were sent by M/s SFPL to the Appellants and when the goods were received by the Appellants, they were received alongwith invoices. Nowhere Shri Kartik Shah has admitted cash purchase of any goods. 13. As regard demand of ₹ 1,07,76,323/- on the ground of undervaluation of finished goods, the Ld. Counsel submits that the pen drives seized on 10.07.2012 from the lockers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Appellant. In case of denial of cenvat credit of ₹ 31,40,087/- on the grounds of non receipt of inputs, the Ld. Counsel submits that the ledger account Smi (Cash) contains certain entries with the suffix Only bills and on that basis the Commissioner has confirmed the demand holding them to be only receipt of invoices. He held that Shri Kartik Shah in his statement dt. 28.01.2014 has stated that on some occasions SFL used to purchase their raw material through SFPL under the cover of proper documents and on perusal of ledger it is seen that M/s SFPL procured the goods in cash from some parties and also procured invoices from some other parties and sent the cash purchased to SFL alongwith the invoices. Thus Shri Kartik agreed to the receipt of invoices from some suppliers without receiving goods from those suppliers instead as claimed by him, the goods were procured from a different person. Although Shri Kartik tried to prove that the entire job of procurement was done by M/s SFPL, the claim does not appear to be correct since the ledger accounts Smi (Cash) and Golden (Only Bill) categorically states the entry as Only bills , no record evidencing the involvement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng goods, the Ld. Counsel submits that at the one hand the adjudicating authority held that the Appellants have cleared goods clandestinely and not paid duty on such goods and on the other hand also held that Appellants have issued only invoices without clearance of goods. Both the findings are incorrect. The adjudicating authority has relied upon ledgers in pen drive namely Bill Condition , Bill Sales and Sankalp Vat Collection . That the Appellants have charged only the CST amount payable with respect to invoices listed in these ledgers accounts. He submits that the findings in respect of ledger account Sankalp Vat collection are not sustainable against the Appellants in as much as said ledger account contains details of invoices of SFPL and not the Appellants. It is not disputed in the impugned order that the account Sankalp Vat Collection ledger accounts are invoices of M/s Sankalp Foils Pvt. Ltd. (SFPL) and not of the Appellants. Even though the said ledger account belong to M/s SFPL, the statement of Shri Kartik Shah was recorded instead of Shri Snehil R Shah, director of M/s SFPL. The statement of director of Appellant company for verifying the invoices of M/s SFPL i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statements. He relies upon judgments to show that onus of establishing clandestine clearance is on revenue. He relies upon judgments in case of CCE Vs. ABS Metals (P)Ltd CCE Vs ABS Metals P.Ltd. 2016 (341)ELT 425(T), Capital Ispat Ltd. Vs. CCE (340) ELT 697(T), Commr. Vs Dhruv Dyestuff P.Ltd. 2016(339) ELT A-131 (Guj), CCE Vs Gopi Synthetics P.Ltd. 2014 (310)ELT (Guj), Rukhmani Concrete P.Ltd. Vs CCE 2013(296)ELT 526(T), Shirly Dyers Vs. CCE 2013 (293) ELT 234 (T), Maruthi Tex Print Processors P.Ltd. Vs CCE 2012 (281) ELT 509 (Mad), In On Creation Vs CCE 2012 (278) ELT 512 (T), Saravana Alloys Steels P.Ltd. Vs. CCE 2011(274)ELT 248(T), CCE Vs Saakeen Alloys P.Ltd.2014 (308) ELT 655 (Guj) Affirmed by Supreme Court in 2015 (319) ELT A117(SC), CCE Raipur Vs P.D. Industries P.Ltd. 2016 (340) ELT 249 (T-Del), CCE, Raipur Vs Heliwal Polypackers P.Ltd. 2016 (340) ELT 204 (Tri-Del), Davinder Snadhu Impex Ltd Vs CCE Ludhiana 2016 (337) ELT 99 (Tri-Del), CCE, Daman Vs Nissan Thermoware P.Ltd. 2011 (266) ELT 45 (Guj. HC), Hingora Industries P.Ltd. Vs CCE, Daman 2015 (325) ELT 116 (Tri.Ahd) to state that onus to prove clandestine removal is on the department which they have to prove by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. Vs CCE 2014 (311) ELT 354 (T), Sharma Chemicals Vs CCE 2001 (130) ELT 271 (T), Resha Wires Pvt. Ltd., Vs CCE 2006 (202) ELT 332 (T), Atlas Conductors Vs CCE 2008 (221) ELT 231 (T), Vishwa Traders Pvt Ltd., Vs CCE 2012 (278) ELT 362 (T), CCE Vs Vishwa Traders Pvt. Ltd. 2013 (287) ELT 243 (Guj), CCE Swati Polyester 2015 (321) ELT 423 (Guj), Commissioner Vs Swati Polyester 2015 (321) ELT A-217 (SC), Flevel International Vs CCE 2016 (332) ELT 416 (Guj), CCE Vs Renny Steel Casting (P) Ltd. 2012(283) ELT 563 (T), CCE Vs Akshay Roll Mills Pvt. Ltd. 2016 (342) ELT 277 (T), Industrial Filter Fabrics Pvt. Ltd. Vs CCE 2014 (307) ELT 131 (T), CCE Vs Birla NGK Insulators Pvt. Ltd. 2016 (337) ELT 119 (T), CCE Vs Ganesh Agro Steel Industries 2012 (275) ELT 470 (T), UOI Vs MSS Foods Products Ltd. 2011 (264) ELT 165 (P H), CCE Vs Sree Rajeswari Mills Ltd. 2009 (246) ELT 750 (T), CCE Vs Sree Rajeswari Mills Ltd. 2011 (272) ELT 49 (Mad.), Shardha Forge Pvt. Ltd., Vs CCE 2005 (179) ELT 336 (T), Arya Fibres Pvt. Ltd. Vs CCE 2014 (311) ELT 529 (T), TGL Poshak Corporation Vs CCE 2002 (140) ELT 187 (T) 16. On the other hand Shri T.G.Rathod, Ld. Joint Commissioner (AR) appearing for the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of dispatch of goods thru borkers. The Appellant has shown the total of value mentioned in purchase godown ledger and compared with Bombay Sales which shows that the figures of both are of around same value. Also even though brokers in their statements had stated that they have purchased goods from the Appellants but the fact remains that the goods were delivered to them from the Vasai Godown of M/s SFPL. During recording of statement though the brokers stated that the goods were purchased in cash and without any bills as per the details found in Bombay Sales , however their statements seems to be self contradictory. Some of the brokers viz. Shri Chhail Singh Deora and Gajendra Purohit also stated that SFL has sold SSCR Coils without any invoice on cash basis of which some coils were used by them for circle cutting and some quantities were sold to some other parties in which case they acted as broker and the payment was collected in cash, but they were not able to provide even the single buyer s name and address who has purchased such goods from them which leads to doubt about the credibility of their statement. The department apart from the papers seized from the lock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17-3-2005 [2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 8. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itnesses in adjudication, their statements cannot be considered as evidence. However, if the Revenue choose to rely on the statements, then in that event, the persons whose statements are relied upon have to be made available for cross examination for the evidence or statement to be considered. The Tribunal in case of M/s Swiber Offshore Construction Pvt. Ltd. Versus CC Kandla 2014 (301) E.L.T. 119 (Tri. - Ahmd.) held that cross examination is imperative to be provided. It held that - We therefore have no hesitation in holding that the impugned Order passed by the Commissioner as an adjudicating authority is appealable order in terms of section 129A of the Act, even as per the ratio laid down in the above binding precedent. Request for cross-examination has been denied and the witnesses have not been examined despite specific reliance by the appellant on section 138B without there being any objective formation of opinion based on any material on record to come to the conclusion that any specified circumstance mentioned in section 138B(1)(a) exists. These circumstances mentioned in section 138B(1)(a) are also contained in pari materia section 9D(1)(a) and were recorded as foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmations, etc. Here in this case, corroborations are lacking. We are aware that in the case of clandestine removal it is not required for the Revenue to prove precise and comprehensive details of each such clearances with 100 per cent accuracy. However, this does not mean that even in the total absence of corroborative evidence without at least establishing a preponderance of probability the case for confirmation of demands can be made. (d) Large number of statements were recorded and also relied upon; but these, statements were not put to test by way of cross-examination and analysis or supported by documentary evidence. The statements could be of help if they support evidences which exist and which requires re-affirmation. In the present case, the statements which deal with interpretation of data in pen drive have not thrown any substantial ground to the case built up by the Revenue. 33. Even though we agree with the argument put forward by the learned DR that the extent of proof required is not that as required in a criminal prosecution, but Revenue should be able at least to discharge the initial burden of establishing the charge which is totally absent in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) Excess/shortage of manufactured goods found in the factory premises. (iv) Excess consumption of electricity/power used in the manufacture of finished goods. (v) Any transit seizure of clandestinely removed goods made by the investigating authority. (vi) Any cash amounts seized from the factory premises or dealer s premises or residential premises searched during investigation. (vii) Confessionary statements of the persons concerned with the clandestine manufacture/removal of excisable goods. 9. It is observed from the case records that in the present proceedings, there are few confessional statements of the persons which were later retracted by the persons concerned. The confessional statements subsequently retracted can be argued to be an afterthought under a proper legal advice but to observe the principles of natural justice, it becomes necessary to provide cross-examination of such witnesses, as held by various judicial courts including the Hon ble Supreme Court relied upon by the appellants. In the case of CCE v. Omkar Textiles - 2010 (259) E.L.T. 687 (Guj.), it was held by the Jurisdictional Gujarat High Court that onus is on the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Central Excise Officers visited their factory premises. The Appellants, on the other hand, have contended that most of the persons whose statements have been relied upon have not been produced for cross-examination and the documents seized from third parties premises have not been corroborated by adducing evidence of any of the customers though the enquiries were conducted at different places as deposed by Shri Anurag Sharma, Inspector, in his cross-examination on 4-3-2002. Out of 19 consignments said to have been cleared by the Appellant No. 1 without payment of duty on the basis of five transporter, we observe that in respect of two consignments, it has been mentioned by the Revenue that the same may not pertain to the Appellants. Further, only one transporter Shri Sanjay Garg of M/s. Balaji Transporter Co. was produced for cross-examination which accounts for only two consignments out of 19 consignments in question. Shri Garg, it is observed from the record of cross-examination, has deposed that they generally work as commission agent and provide transport to Appellant No. 1; the payment is used to be received directly by the drivers after delivery of the goods at the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated by an error of law . The Tribunal also took note of the decision in Kamal Biri Factory and Shri Khushnuden Rehman Khan v. CCE, Meerut - 2003 (161) E.L.T. 1197 (T) = 1997 (23) RLT 609 (CEGAT) wherein view has been taken that the allegations of clandestine removal of the goods will not stand established when based on the entries made by the assessee s employee in a diary or on the basis of third party s record in the absence of any corroborative evidence. It has also been the consistent view of the Tribunal that the statements of the witnesses, without allowing the assessee to test the correctness of the same by cross-examining those witnesses; cannot be made the basis for holding the allegation against the assessee. (Takshila Spinners v. CCE, supra). Similar views have been expressed by the Tribunal in the case of Haryana Petrochemicals Ltd., supra wherein the Tribunal has held that reliance cannot be placed on the documents maintained by a third party who did not have the courage to come forward for cross-examination in order to test the veracity and correctness of the private record maintained by him. It has also been held by the Tribunal in the case of Kothari Synthetics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d none of the labourers whose statements have been relied upon by Revenue have mentioned that the goods in question were delivered to Chitra Traders from the premises of the Appellants. The material brought on record may at the most create a doubt only. But doubt cannot take the place of evidence. The Revenue has, thus, not proved its case against the Appellants in respect of 149 consignments. We, therefore, set aside the demand of duty and penalty imposed on Appellant-company and consequently the demand of interest. 11. From the above settled law, it is clear that in a clandestine removal case, the facts of clandestine removal of excisable goods cannot be established only on the basis of certain statements which are retracted later but there has to be positive evidences like purchase of excess raw materials, shortage/excess of raw materials/finished goods found in the stock/factory premises of the appellant, excess consumption of power like electricity, any seizure of cash during the investigation when huge transactions are made in cash. In the present case also, it is observed, from the annexures to the show cause notice dated 1-5-2009 issued to the appellants, that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement of brokers which were even self contradictory. Though the statement of directors has also been relied upon by the department, but we found that even in some statements they have stated that the data found in pen drive do not belong to M/s SFL and it belongs to M/s Sankalp. Inspite of fact that some of the statements were recorded in presence of Snehil R shah who is director of M/s Sankalp, but even then he was not questioned about such data. Atleast the officers could have recorded his statement to ascertain the truth. Even if the statements of director are considered inculpatory the same cannot be relied upon in absence of corroboration with material evidence as held in case of Tejwal Dyestuff Ind. Vs. 2007 (216) ELT 310 (TRI) and 2009 (234) ELT 242 (GUJ.). Thus the statement of directors cannot lead to inference that the goods stated in Bombay Sales ledgers are of Appellant. We also find that the brokers have even stated that they have taken the goods from Vasai Godown of M/s SFPL. In such case there is no reason to hold that the Appellant has dealt with M/s SFL. Thus in both cases i.e Bombay Sales and Smi Cash Sales apart from the statements which are even contradic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iana which is an independent body have also stated in their letter dated 19 May, 2005 that in normal course, there is a wastage of around 40% same has also not been considered by the Adjudicating Authority but without bringing any corroborative evidence apart from statement of Shri Baldev Singh demand has been confirmed. Such a situation has been dealt by this Tribunal in the case of Klene Paks Ltd. v. CCE, Bangalore-I (supra), wherein the facts of the case are as under :- 2. The relevant facts that arise for consideration are appellant-company herein are manufacturers of HDPE/PP, woven fabrics, sacks. The appellant-company availed Cenvat credit of the duty paid on HDPE/PP granules purchased from various manufacturers like M/s. GAIL; M/s. Reliance Industries Ltd; M/s. HPCL etc. The officers of the DGCEI visited their factory and carried out various investigations. First show cause notice dated 4-7-2003 was issued directing one of the appellant-company herein to show cause as to why the 323 bags of plastic granules seized in the godown of M/s. Mahalakshmi Plastics be not confiscated. Further, investigations were carried out by the authorities and statements of various persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the evidence on record, it is apparent that except for the shortage in raw material viz., HD which was disputed by the assessee and the statement of the Director, there was no other evidence on record to indicate clandestine manufacture and removal of final products. On behalf of the revenue, except for placing reliance upon the statement of the Director recorded during the course of the search proceedings, no evidence has been pointed out which corroborates the fact of clandestine manufacture and removal of final products. In the circumstances, on the basis of the material available on record, it is not possible to state that the Tribunal has committed any legal error in giving benefit of doubt to the assessee . and thereafter the Hon ble Gujarat High Court has held that the confessional statement of an accused in criminal offence which cannot be par with the statement recorded during preventive checks, therefore, the Hon ble High Court has set aside the charge of clandestine removal. 9. We also find that in the case of Mahavir Metals Industries v. CCE Cus., Daman, Vapi (supra), this Tribunal further held as under :- 7. I further note that my learned broth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts out of the inputs detected short on the calculation of input-output ratio. I find that as correctly pointed out by the ld. Counsel that this Bench in the case of Suzlon Fibres Pvt. Ltd. (supra), in Para 3 has categorically stated as under : 3. We agree with the above contention of the ld. Advocate, apart from the input-output ratio, there is no evidence on record to show clandestine manufacture and clearance of the goods. Such cases are required to be established beyond doubt on the basis of concrete and positive evidences. We accordingly set aside the impugned order and appeals are allowed with consequential relief. 17. My view as regards there cannot be allegation of clandestine removal unless there is an evidence to indicate that there was clandestine manufacturing, is fortified by the judgment of Hon ble High Court of Gujarat in the case of Nissan Thermoware Pvt. Ltd., wherein their Lordship have held as under : 7. Thus, on the basis of findings of fact recorded by the Tribunal upon appreciation of the evidence on record, it is apparent that except for the shortage in raw material viz., HD which was disputed by the assessee and the statement of the Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of the statement of Shri Baldev Singh, Managing Director of the appellant and no other evidence in the form of to manufacture of such huge quantity, the consumption of electricity, additional packing material, payment for purchase of additional packing material, payment received for clandestine removal of goods, how the goods were transported has been brought on record by the Adjudicating Authority or the inspecting team, therefore, relying on the said decision cited hereinabove, we hold that charge of clandestine removal is not sustainable in the absence of any corroborative evidence to the statement of Shri Baldev Singh, Managing Director. 12. In these circumstances, we set aside the impugned order and allow the appeals filed by the appellants with consequential relief. In case of TGL Poshak Corporation Vs. CCE 2002 (140) ELT 187 (TRI), the tribunal held as under : 5. Heard Ld. SDR, Shri G.S. Menon, who reiterates the departmental view. He contends that there are statements and several registers maintained by the party which clearly indicated that they had manufactured and cleared the goods. He refers to the evidence which was culled out by the investigati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner s order that Revenue is solely relying on the exercise note books mainly balance sheets. The Tribunal in large number of cases which have already been noted above in the tabulated list of citations furnished by the Counsel has held that unless there is clinching evidence on the nature of purchase of raw materials, use of electricity, sale, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of note books maintained by some workers. The facts in the case of Aswin Vanaspati Industries would be identical to the facts herein as in that case also the allegation was with regard to removal of Vanaspati based on the inputs maintained. The Tribunal went in great detail and have clearly laid down that unless department produces evidence, which should be clinching, in the nature of purchase of inputs and sale of the final product demands cannot be confirmed based on some note books. A similar view was expressed by the Tribunal in the other judgments noted supra. The citations placed would directly apply to the facts of this case. Hence, following the ratio of the cited judgments, the assessee s appeal is allowed. 7. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 354 (T), Sharma Chemicals Vs CCE 2001 (130) ELT 271 (T), Resha Wires Pvt. Ltd., Vs CCE 2006 (202) ELT 332 (T), Atlas Conductors Vs CCE 2008 (221) ELT 231 (T), Vishwa Traders Pvt Ltd., Vs CCE 2012 (278) ELT 362 (T), CCE Vs Vishwa Traders Pvt. Ltd. 2013 (287) ELT 243 (Guj), CCE Swati Polyester 2015 (321) ELT 423 (Guj), Commissioner Vs Swati Polyester 2015 (321) ELT A-217 (SC), Flevel International Vs CCE 2016 (332) ELT 416 (Guj), CCE Vs Renny Steel Casting (P) Ltd. 2012(283) ELT 563 (T), CCE Vs Akshay Roll Mills Pvt. Ltd. 2016 (342) ELT 277 (T), Industrial Filter Fabrics Pvt. Ltd. Vs CCE 2014 (307) ELT 131 (T), CCE Vs Birla NGK Insulators Pvt. Ltd. 2016 (337) ELT 119 (T), CCE Vs Ganesh Agro Steel Industries 2012 (275) ELT 470 (T), UOI Vs MSS Foods Products Ltd. 2011 (264) ELT 165 (P H), CCE Vs Sree Rajeswari Mills Ltd. 2009 (246) ELT 750 (T), CCE Vs Sree Rajeswari Mills Ltd. 2011 (272) ELT 49 (Mad.), Shardha Forge Pvt. Ltd., Vs CCE 2005 (179) ELT 336 (T), Arya Fibres Pvt. Ltd. Vs CCE 2014 (311) ELT 529 (T), TGL Poshak Corporation Vs CCE 2002 (140) ELT 187 (T). In view of said judgments we find that the charges of clandestine removal on the basis of pen drive data and sheets are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon the purchase shown from Golden Metal Pvt. Ltd. to show that the invoices were received without any goods. However the Appellant has annexed the declaration in Form 403 issued under Gujarat vat Rules duly stamped by the commercial officer of check post as proof of transit of goods for both the invoices. In view of said facts we find that the allegation and the findings of the adjudicating authority is not sustainable. Moreover there is no person who has received the cash from the Appellant. No person from Appellant company has been named as having receipt of cash and place where the cash was received or manner of receiving cash. Thus the allegations on this account are not sustainable. 23. The demand has also been made against Appellant on the ground that they issued invoices without delivery of goods, the statement of Shri Pravin Vasant Mehta of M/s Jigar Plast was recorded on 13.12.2013 wherein he has stated that sale invoices of the Appellant without delivery of goods has been reversed. However we find that Shri Pravin Mehta has nowhere stated that they have purchased goods from M/s SFL. He has stated that all the goods were procured by M/s Jigar Plast through broker Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only bills were supplied without any actual delivery. Also the statements of the brokers and the intermediary dealers and buyers has been relied upon. The Appellant has pointed out that the findings are merely on basis of statements and without any support of documentary evidence. That merely on basis of records or papers of third party the allegation cannot be sustained. The Appellant has also relied upon the judgments in case of Dhruv Dyestuff Pvt. Ltd. 2016 (339) ELT A 131 and Kubber Tobaco India Ltd. 2016 (338) ELT 013 that for relying upon the statements the provisions of section 9D of the Central Excise Act has to be followed. He also relied upon the Tribunal order in case of Dhakad Metal Corporation 2015 (330) ELT 561 (TRI) that on the basis of confessional statement without corroborative evidence, the demands cannot be raised. That Shri Kartik Shah in his statement dt. 28.01.2014 and 29.01.2014 had clearly stated that the diversion of the goods, if any, may have occurred due to diversion of goods by broker of M/s SFPL and that all clearances made by them were under invoices. He has pointed out entries out of Bill condition ledger were of invoices in respect of which lorr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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